The rural labour shortage continues to fuel sales of ready-to-move (RTM) homes in Western Canada. Finding local tradespeople willing to tackle a new home build is virtually impossible for many rural residents.
But once an RTM is delivered and set in place, it might be easier to find someone to tackle smaller renovation or improvement jobs. And if you can find a tradesperson or are up to some DIY, the federal government is willing to chip in and help you fund the project. The Economic Action Plan included in the 2009 federal budget included a couple of gems for home buyers and owners.
One of those is the Home Renovation Tax Credit program (HRTC), which offers a 15 percent tax credit on qualifying home renovations to a maximum of $1,350. However, those renovations only qualify if they were made on a principal residence. “There is no specific reference to the type of residence… but it does have to be your principal residence,” says Debbie Johnson, manager of communications for the Canada Revenue Agency (CRA).
Buyers of RTM homes can use the program to do additional work to the house after it’s on its foundation and the owner has moved in. “The home would have to be in place,” says Johnson. With the HRTC running until January 31, 2010, there will be plenty of time for people expecting delivery of an RTM this year to get in on it.
According to the Department of Finance website, examples of the kinds of work that are eligible for tax credits include building a patio deck or landscaping the grounds around the house.
But when it comes to landscaping, farm residents may want to look at CRA’s Income Tax Interpretation Bulletin, which says the farmhouse must be considered separate from the farm operations. That narrows things down to only include improvements immediately around the house. Barnyard improvements don’t qualify.
Having said that, the list of eligible expenses includes the cost of labour and professional services, building materials, fixtures, rentals, and permits, Johnson says. That broad description makes for a pretty wide variety of eligible projects for homeowners to consider.
Refund at tax time
Making a claim under the HRTC program won’t result in a cheque arriving in your mailbox, though. The government isn’t actually handing out money that way. Instead, there will be a new line on the 2009 income tax return for homeowners to apply. The eligible amount will be deducted from their annual income tax bill. But that still means more money in your pocket.
One other program that may mean tax savings for RTM buyers – or home buyers in general – is the First-Time Home Buyer’s Tax Credit. Anyone making a first-time home purchase after January 27th is eligible, and what CRA considers an eligible home takes most dwellings into account. The tax credits are assessed the same way as with the HRTC program – just fill in the appropriate box on your 2009 tax return. For this year the government is offering $750 in credits to first-time buyers.
And first-time buyer only means anyone who has not owned their own home in the previous four calendar years.
For anyone claiming tax credits under either of these programs, you won’t have to submit receipts with your tax return, but CRA wants applicants to keep them handy in case an auditor asks to see them. For more information on these programs look online at the Dept. of Finance (www.budget.gc.ca/2009)and CRA websites (www.cra-arc.gc.ca).